Appellant/Defendant v. K.K.KumarasamyS/o.Kuppusamy GounderKallipattiKondayampalayam VillageGopichettypalayam Taluk,Periyar District

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 12.3.2008C O R A MTHE HONOURABLE Mr.JUSTICE C. NAGAPPANAppeal Suit No.1376 of 1995R.Kamalam5/12, Kangeyam Road,Kodumudi Village,Erode Taluk, Periyar District. ...Appellant/Defendant -Vs-K.K.KumarasamyS/o.Kuppusamy GounderKallipattiKondayampalayam VillageGopichettypalayam Taluk,Periyar District. ... Respondent/PlaintiffAppeal against the judgment and decree dated 27.3.1995 made inO.S.No.200 of 1990 on the file of II Additional Subordinate Judge,Erode. For appellant ... Mr.R.Raja Raman for Mr.G.RajanFor respondent ... Mr.N.ManokaranJUDGMENTThe defendant has preferred this appeal challenging thejudgment and decree dated 27.3.1995 passed in O.S.No.200 of 1990by the learned II Additional Subordinate Judge, Erode.2. The respondent herein filed the suit seeking for adecree against the defendant for a sum of Rs.74,800/- with futureinterest and costs. The case of the plaintiff is that thedefendant borrowed a sum of Rs.55,000/- from the plaintiff for herbusiness and family expenses on 30.3.1987 and executed the suitpronote agreeing to repay the same with interest at 12% per annum https://hcservices.ecourts.gov.in/hcservices/ and the defendant did not repay any amount either towards principalor interest inspite of demand and the defendant was doing businessand hence the interest was claimed at the rate of 12% per annum inthe suit. 3. The defendant, in the written statement, has deniedthe plaint allegation that she borrowed a sum of Rs.55,000/- andexecuted the suit promissory note and stated that the suit promissorynote was executed under the following circumstances by the defendant.According to the defendant, she and four others entered into apartnership deed under the name and style of 'Premier Steels' in May1984 and purchased land at Thekkalur Village, Avanashi Taluk,Coimbatore and the defendant's share was 25% in the firm and theplaintiff, a close friend of the defendant's husband, expressed hisdesire to become a partner in the firm and the defendant's husbandagreed to give half of her share i.e., 12.5% to the plaintiff andthe value of 12.5% share was fixed at Rs.1,10,000/- and thepartnership was re-constituted by taking the plaintiff as one of thepartners in the firm in the month of November, 1985 and during thebeginning of 1987, the plaintiff doubted the actual value of the landwhich was purchased in the name of the firm and felt his 12.5% is notworth to the value of Rs.1,10,000/- and he valued it at Rs.55,000/-and he wanted some record for the remaining Rs.55,000/- from thedefendant and in view of close friendship, the suit promissory notewas executed in favour of the plaintiff. The defendant has furtherstated that she did not receive any amount from the plaintiff on thesuit promissory note and the same is not supported by considerationand no demand of payment was made. The defendant in her additionalwritten statement has stated that when her signature was taken in thesuit promissory note, it did not bear the signature of the secondattestor, by name Devaraj and behind the back of her, the plaintiffhas fabricated the suit promissory note by introducing the secondattestor and the same is not valid in law and it is vitiated on theground of fabrication.4. The plaintiff, in his reply statement, has stated thatthe suit promissory note was written by the husband of thedefendant in the presence of both the attestors and the defendantand the defendant admitted the contents of suit promissory note ascorrect and signed the same in the presence of witnesses and it isfalse to state that Devaraj, the attestor was not present at thetime of execution of the suit promissory note and did not sign asattestor. 5. The Trial Court framed three issues and the plaintiffexamined himself as P.W.1 and examined P.W.2 and marked Ex.A1Promissory Note on his side and the defendant examined herself asD.W.1 and examined D.W.2 and did not adduce any documentary evidenceon her side. On a consideration of oral and documentary evidence,the trial Court held that the suit promissory note is supported byconsideration and the plaintiff is entitled for the relief sought for https://hcservices.ecourts.gov.in/hcservices/ and granted a decree for a sum of Rs.74,800/- together withsubsequent interest at 6% per annum from the date of the suit tillthe date of realisation with costs. Challenging the same, thedefendant has preferred the present appeal. For the sake ofconvenience, in this judgment, the parties are referred to as arrayedin the suit. 6. The Points for determination in this appeal are:-1. Whether the suit promissory note is not supported byconsideration and came to be executed in thecircumstances stated by the defendant.2. Whether the plaintiff is entitled for the suit claim.POINT NOS.1 AND 2:7. The learned counsel for the appellant submits that the caseof the defendant is that Ex.A1 promissory note was executed assecurity for the recovery of half of the investment of theshare capital made by the plaintiff in the 'Premier Steels' businessand the plaintiff, in the cross-examination, has admitted the sharecapital invested by the defendant in the said business and thus thedefendant has shown by preponderance of probabilities there is noconsideration in the manner pleaded in the plaint and the presumptionunder Section 118 of the Negotiable Instruments Act disappears andthe plaintiff has not proved the consideration for the suitpromissory note and hence the judgment and decree of the TrialCourt are liable to be set aside. In support of his submission, thelearned counsel for the appellant relies on a decision of theFull Bench of the Andhra Pradesh High Court in G.VASU v. SYED YASEENSIFUDDIN QUADRI (AIR 1987 ANDHRA PRADESH 139) and the decision of theApex Court in K.P.O.MOIDEENKUTTY HAJEE v. PAPPU MANJOORAN ANDANOTHER (AIR 1996 SUPREME COURT 3356).8. Per contra, the learned counsel for the respondent submitsthat the defendant having admitted the execution of the suitpromissory note, the presumption under Section 118 (a) of theNegotiable Instruments Act would arise that it is supported byconsideration and the defendant has not adduced evidence to prove thecircumstances upon which she relies to disprove the presumption andin any event, the plaintiff has let in evidence by examining theattestor to prove the passing of consideration under the suitpromissory note and proved his case and hence the judgment and decreeof the Trial Court are sustainable. In support of his submission,the learned counsel for the respondent relies on the decision of theSupreme Court in BHARAT BARREL v. AMIN CHAND PYARELAL (1999 (I) CTC497 (S.C.). https://hcservices.ecourts.gov.in/hcservices/

9. Ex.A1 is the suit promissory note, dated 30.3.1987, for a sumof Rs.55,000/- and the defendant has admitted the execution of thesame in favour of the plaintiff. According to the defendant, Ex.A1is not supported by any consideration and it came to be executed inthe following circumstances and she has further stated that shealong with four others entered into partnership under the name andstyle of 'Premier Steels' in May 1984 and purchased the land atThekkalur Village and her share was 25% and the plaintiff being aclose friend of her husband, expressed his desire to become apartner in the firm and the defendant's husband agreed to give halfof her share i.e., 12.5% to the plaintiff, valued at Rs.1,10,000/-and the partnership was re-constituted by taking the plaintiff as oneof the partners in the firm in the month of November, 1985 and in thebeginning of the year 1987, the plaintiff doubted the actual valueof the land purchased by the firm and he valued his share of 12.5% atRs.55,000/- and wanted some record for the remaining Rs.55,000/- fromthe defendant and in view of the close acquaintance, she executedthe suit promissory note in favour of the plaintiff without receivingconsideration.10. It is true that the plaintiff in his testimony as P.W.1,has admitted that he invested in the share capital of the firm, buthe has denied that the suit promissory note was executed as asecurity for recovery of half of his investment. According toP.W.1, the partnership business transaction is entirely differentfrom the suit transaction and independently, the defendant borroweda sum of Rs.55,000/- as loan from the plaintiff and executed thesuit promissory note. Since the execution of Ex.A1 promissorynote was admitted by the defendant, the presumption under Section118 (a) of the Negotiable Instruments Act would arise that it issupported by consideration and the burden is on the defendant toprove the non-existence of the consideration by bringing on recordthe preponderance of probabilities by reference to the circumstancesupon which she relies. 11. The law in this regard is well settled. Their Lordshipsof the Supreme Court, while interpreting the presumption arisingunder Section 118 of the Negotiable Instruments Act, in the decisionrelied on by the learned counsel for the respondent and reported in1999 (I) CTC 497 (S.C), referred to both the decisions cited bythe learned counsel for the appellant mentioned above and havelaid down the law as under:- " 14. Upon consideration of various judgments asnoted herein above, the position of law which emergesis that once execution of the promissory note isadmitted, the presumption under Section 118 (a)would arise that it is supported by consideration. https://hcservices.ecourts.gov.in/hcservices/ Such a presumption is rebuttable. The defendant canprove the non-existence of consideration by raising aprobable defence. If the defendant is proved to havedischarged the initial onus of proof showing that theexistence of consideration was improbable or doubtfulor the same was illegal, the onus would shift to theplaintiff who will be obliged to prove it as a matterof fact and upon its failure to prove woulddis-entitle him to the grant of relief on the basis ofthe negotiable instrument. The burden upon thedefendant of proving the non-existence of theconsideration can be either direct or by bringing onrecord the preponderance of probabilities by referenceto the circumstances upon which he relies. ..........To disprove the presumption the defendant has tobring on record such facts and circumstances, uponconsideration of which the court may either believethat the consideration did not exist or its non-existence was so probable that a prudent man would,under the circumstances of the case, shall act uponthe plea that it did not exist. We find ourselves inthe close proximity of the view expressed by the FullBenches of the Rajasthan High Court and AndhraPradesh High Court in this regard. 15. ......... 16. ......... Even though it is true that theplaintiff's evidence was not believed yet we are ofthe opinion that the same could not be made basis forrejecting its claim because obligation upon theplaintiff to lead evidence for the purposes of "toprove his case", could not have been insisted uponbecause the defendant has prima facie or initially notdischarged his onus of proof by showing directly orprobabilising the non-existence of consideration." 12. In the present case, the existence of the consideration,mentioned in the suit promissory note, was denied by the defendantwith reference to the circumstances, which according to her, showedthe non-existence of such consideration. According to the defendant,the plaintiff doubted the actual value of the land purchased by thefirm and felt his 12.5% share is not worth of Rs.1,10,000/- he hasinvested in the share capital and he valued it at Rs.55,000/- andwanted some record for the remaining Rs.55,000/- from the defendantand hence she executed the suit promissory note. The defendantadduced only oral evidence by examining herself as D.W.1 and herhusband as D.W.2 and she did not adduce any evidence to show thatthe plaintiff doubted the value of the land and the worth of hisinvestment and he made the defendant to execute the promissorynote as security for the half of his investment. In fact, the otherpartners of the firm have not been examined as witnesses and no https://hcservices.ecourts.gov.in/hcservices/ document has been marked to show the purchase as well as the value ofthe land. In short, the defendant has not substantiated her casethat the suit promissory note came to be executed as a security forthe half of the investment made by the plaintiff in the firm and shehas failed to prove the circumstances upon which she relied. In theresult, the defendant has not discharged the initial burden of proofby showing the non-existence of the consideration and the onus ofproof of the legal presumption in favour of the plaintiff could notbe shifted and there is no obligation upon the plaintiff to leadevidence to prove his case. 13. It is true that the plaintiff has produced evidence inthe case and that evidence is in fact the evidence in rebuttal of theevidence produced by the defendant in the case. The plaintiff,besides examining himself as P.W.1, has examined one of the attestorsof suit promissory note as P.W.2. P.W.2 was working as a Lecturerand he is well known to the defendant as admitted by her in hertestimony. According to P.W.2, the plaintiff paid a sum ofRs.55,000/- to the defendant in the presence of himself, the otherattestor and the husband of the defendant and the husband of thedefendant viz., D.W.2-Palaniappan, wrote the suit promissory note andthe defendant put her signature in it in their presence. Thedefendant, in her additional written statement, has disputed thepresence of P.W.2 and has stated that the suit promissory notedid not bear the signature of P.W.2 on the date of its execution andlater, the plaintiff has fabricated the suit promissory note byintroducing the signature of P.W.2 in it. The Trial Court hasrightly disbelieved this contention of the defendant on the groundthat she has not put forth such a contention at the earliest point oftime in her original written statement and hence it cannotbe believed. 14. The finding of the Trial Court that the testimonies ofP.Ws.1 and 2 are acceptable and the plaintiff has proved that thesuit promissory note is supported by consideration, is based onproper appreciation of evidence available on record. In view of thediscussions made above, the plaintiff is entitled to the suit claim.The Point Nos.1 and 2 are determined accordingly.15. There are no merits in the appeal and the same is dismissedwith costs.sd/-Asst.Registrar/true copy/ Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ vksTo 1. The II Additional Subordinate Judge,Erode.Copy to:The Section Officer,V.R.Section, High Court, Madras.+1 cc To M/s.N.Manokaran, Advocate, SR.14040A.S.No.1376 of 1995akr [co]gkg/21.4